UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the six month period ended September 30, 2000
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the period from ______________ to ______________
Commission file number 0-26445
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ACCESS HEALTH ALTERNATIVES, INC.
--------------------------------
(Exact name of small business issuer as specified in its charter)
Florida 59-3542362
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(State of other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
4619 Parkbreeze Court, Orlando, Florida 32808
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(Address of principal executive offices)
(407) 299-0629
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(Issuer's Telephone Number)
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(Former name, former address and former fiscal year, if changed since last
report)
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date. There are 3,158,275 shares of common
stock as of September 30, 2000.
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Transitional Small Business Disclosure Format (Check one) Yes [ ] No [X]
PART I - FINANCIAL INFORMATION
<PAGE>
<TABLE>
<CAPTION>
ACCESS HEALTH ALTERNATIVES, INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
SEPTEMBER 30, DECEMBER 31,
2000 1999
--------------- --------------
<S> <C> <C>
ASSETS
------
Current assets:
Cash $ 2,858 $ 1,757
Receivables:
Trade, net 72,675 58,923
Other 4,380 4,380
--------------- --------------
Total receivables 77,054 63,303
Inventories 114,282 144,250
--------------- --------------
Total current assets 194,194 209,310
Property and equipment, net 36,441 52,357
Other assets 5,051 5,050
Deferred recission costs 640,663 640,663
--------------- --------------
Total assets $ 876,349 $ 907,380
=============== ==============
LIABILITIES AND STOCKHOLDER'S DEFICIT
-------------------------------------
Current liabilities:
Notes and commercial paper $ 1,617,128 $ 1,491,348
Current obligation under capital lease 6,561 8,847
Bank overdraft 14,763 8,016
Accounts payable 473,085 404,935
Accrued liabilities 938,424 610,511
Due to related parties:
Stockholders 158,159 185,137
Limited liability companies including recision 1,603,809 1,603,809
of $763,750 to be offered to holders of economic
interests at September 30, 1999
Access Healthcare, Inc. 164,187 29,651
--------------- --------------
Total due to related parties 1,926,155 1,818,597
--------------- --------------
Total current liabilities 4,976,117 4,342,254
Unearned income 196,694 274,370
Obligation under capital lease, less current portion 12,594 10,749
Minority interest in subsidiary 129,545 129,545
--------------- --------------
Total liabilities 5,314,950 4,756,918
Stockholders' deficit:
Preferred stock, $.01 par value, 10,000,000 shares authorized, - -
none issued
Common stock, $.001 par value, 50,000,000 shares authorized,
3,158,275 shares issued and outstanding 3,158 2,627
Capital in excess of par value 1,779,691 1,530,217
Accumulated deficit (6,221,450) (5,382,382)
--------------- --------------
Total stockholders' deficit (4,438,601) (3,849,538)
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Total liabilities and stockholders' deficit $ 876,349 $ 907,380
=============== ==============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
ACCESS HEALTH ALTERNATIVES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2000 1999 2000 1999
---------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
Revenues:
Equipment $ - $ - $ - $ -
Products 39,019 161,550 138,420 362,175
Other 19,000 49,164 57,702 184,408
---------- ---------- ---------- ------------
Total revenues 58,019 210,714 196,122 546,583
Cost of sales:
Equipment - - - -
Products 6,888 17,246 29,968 94,360
Other - - - 2,460
---------- ---------- ---------- ------------
Total cost of sales 6,888 17,246 29,968 96,820
---------- ---------- ---------- ------------
Gross profit 51,131 193,468 166,154 449,763
Selling, general and administrative 228,443 539,894 818,206 1,365,633
---------- ---------- ---------- ------------
Operating loss (177,312) (346,426) (652,053) (915,870)
Other expense:
Interest expense 136,382 55,389 185,463 104,764
Other, net 121 - 1,552 -
---------- ---------- ---------- ------------
Total other expense 136,503 55,389 187,015 104,764
---------- ---------- ---------- ------------
Net loss $(313,815) $(401,815) $(839,068) $(1,020,634)
========== ========== ========== ============
Basic net loss per share $ (0.10) $ (0.24) $ (0.27) $ (0.70)
*** ========== ========== ========== ============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
ACCESS HEALTH ALTERNATIVES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2000 1999 2000 1999
---------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss $(313,815) $(401,815) $(839,068) $(1,020,634)
Adjustment to reconcile net loss to net cash provided
by (used in) operating activities:
Depreciation and amortization 7,958 9,174 15,916 27,521
Losses of limited liability companies - 92,482 - 178,686
Unearned income recognized (38,676) (19,500) (77,676) (58,500)
Issuance of common stock for services 145,005 180,000 145,005 406,280
Cash provided by (used in) changes in:
Receivables (8,477) (73,853) (13,751) (95,103)
Inventories 6,888 1,366 29,968 14,529
Other assets 0 9,927 0 (979)
Bank overdraft 11,412 32,725 6,747 (68,632)
Accounts payable (3,291) 47,495 68,150 (91,386)
Accrued liabilities (41,789) 45,038 327,913 125,189
---------- ---------- ---------- ------------
Net cash used in operating activities (234,785) (76,961) (336,795) (583,029)
Cash flows from investing activities:
Purchases of property and equipment (0) (1,194) (0) (9,132)
---------- ---------- ---------- ------------
Cash flows from financing activities:
Payments on notes and commercial paper - (31,026) - (165,013)
Proceeds from notes and commercial paper 43,277 199,999 125,780 644,428
Due to stockholders (24,928) 3,001 (26,979) (91,669)
Advances (to) from limited liability companies - (147,575) - (254,264)
Due to related party 109,557 (8,637) 134,536 (8,276)
Payments on capital lease obligations 2,493 - (441) -
Proceeds from issuance of stock 105,000 - 105,000 485,000
---------- ---------- ---------- ------------
Net cash provided by financing activities 235,400 15,762 337,897 610,206
---------- ---------- ---------- ------------
Net (decrease) increase in cash 615 (62,393) 1,101 18,045
Cash at beginning of period 2,242 80,857 1,757 419
---------- ---------- ---------- ------------
Cash at end of period $ 2,857 $ 18,464 $ 2,858 $ 18,464
========== ========== ========== ============
Supplemental disclosure:
Cash paid during the period for interest $ 2,250 $ 55,389 $ 11,660 $ 91,871
========== ========== ========== ============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
ACCESS HEALTH ALTERNATIVES, INC.
Notes to Consolidated Financial Statements
(1) ORGANIZATION
On September 2, 1998, Access HealthMax Holdings, Inc. ("Holdings"), f/k/a
PLC Ventures Corp. ("PLC") acquired approximately 94.3% of the outstanding
common stock of Access HealthMax, Inc. ("HealthMax"), for 565,100 shares of
authorized, but previously unissued common stock. Immediately preceding the
exchange, there were 437,500 shares outstanding of PLC. The shares of PLC
had been issued for a total consideration of $1,000. PLC had no sales or
revenues since its formation on October 2, 1988 and had zero stockholders'
equity at the time of acquisition of HealthMax. For accounting purposes,
the acquisition has been treated as an acquisition of PLC by HealthMax and
as a recapitilization ("Reverse Acquisition") of HealthMax. The historical
financial statements prior to September 2, 1998 are those of HealthMax. Pro
forma information is not presented, since the combination is a
recapitilization rather than a business combination. The deficiency in the
net assets of PLC were not adjusted in connection with the Reverse
Acquisition since it consisted of accounts payable.
On March 11, 1999, Holdings changed its name to Access Health Alternatives,
Inc. ("Alternatives"). Unless the context indicates otherwise, references
hereinafter to the "Company" include HealthMax and/or Alternatives.
On March 3, 1999, the Board of Directors authorized a one-for-ten reverse
stock split effective March 15, 1999. All references in the financial
statements to number of shares, per share amounts and market prices of the
Company's common stock have been retroactively restated to reflect the
decreased number of common shares outstanding.
(2) BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited interim
consolidated financial statements include all adjustments necessary to
present fairly the financial position of the Company, the results of its
operations and cash flows for the interim periods reported. These
adjustments are of a normal recurring nature. However, the accompanying
unaudited interim consolidated financial statements have been prepared in
accordance with the instructions and requirements of Form 10-QSB and
Regulation S-B and, therefore, do not include all information and footnotes
for a fair presentation of financial position, results of operations and
cash flows in conformity with generally accepted accounting principles.
The balance sheet as of December 31, 1999, was derived from the audited
consolidated balance sheet. These statements should be read in conjunction
with the financial statements included in the Company's Form 10-KSB filed
with the Securities and Exchange Commission, which include audited
financial statements for the year ended December 31, 1999. The results of
operations for the interim periods presented are not necessarily indicative
of the results that may be expected for the year.
<PAGE>
(3) LITIGATION
In October, 1999 HealthMax was advised by the Department of Professional
and Financial Regulation, Bureau of Banking, Securities Division for the
State of Maine that certain sales of LLC's economic interests to Maine
residents were not covered by an exemption from registration, and were
effected with the assistance of a person not licensed to sell securities in
that state, and therefore are subject to rescission to the Maine investors,
but has not yet determined the manner or method of this offer. Neither the
LLC's, HealthMax nor the Company has sufficient funds available to return
the full amount of the Maine investors' interests ($763,750), should they
all elect to rescind their investment. The Company has recorded a liability
previously recorded with respect to the state of Maine investors of
$640,663. The Company has recorded deferred rescission costs for $640,663.
In December 1999, the Company became aware of an inquiry by the
Comptroller's office of the State of Florida into the manner by which
certain LLC interests were sold to residents of Florida. The State has
requested certain documents and information from the Company, from LLC's
and from HealthMax in what the Company believes is an effort to determine
if securities were sold without registration or without an exemption from
registration, or by persons not licensed to sell securities in the State.
The Company is cooperating with the State's inquiry, and is unable to
speculate at this time as to the outcome of such inquiry. All LLC interests
sold in the State of Florida are approximately $1,472,000.
The Company has been notified of three separate law suits by various
lenders and vendors demanding, among other things, return of principle and
interest. There has also been a suite filed by one LLC investor.
(4) CONTINGENCY
At December 31, 1999, the Company has suffered recurring losses and has a
net capital deficiency of $3,849,538 and a working capital deficiency of
$4,132,944, which raises substantial doubt about its ability to continue as
a going concern. Loss have continued, although at a slower rate, and are
expected to continue for the balance of the year. The Company is
contemplating a public or private offering of securities as a means of
raising funds to implement its business plan.
3
<PAGE>
(5) SUBSEQUENT EVENTS
ACCESS HEATHCARE
The Company agreed to acquire Access HealthCare, Inc. (Healthcare) during
1999, subject to certain conditions including the financing of
Alternatives. Under the terms of the acquisition, to be accounted for as a
pooling of interests, the Company will exchange shares of common stock
for all of HealthCare's outstanding shares. HealthCare operates a
chiropractic group practice in Central Florida and has affiliated
chiropractic practices throughout Florida.
If the acquisition is consummated, the financial position and results of
operations of the Company and HealthCare will be combined in 2000
retroactive to January 1, 2000. In addition, all prior periods presented
will be restated to give effect to the pooling.
Presented below are condensed combined pro forma financial statements as of
and for the nine month period ended September 30, 2000 to give effect to
the transaction. The condensed combined financial statements reflect the
elimination of intercompany transactions.
<TABLE>
<CAPTION>
Condensed balance sheet at September 30, 2000:
COMPANY HEALTHCARE ELIMINATIONS COMBINED
------------ ------------ -------------- -----------
<S> <C> <C> <C> <C>
Assets:
Current assets $ 194,194 $ 289,127 $ 483,321
Property & equipment, net 36,441 72,295 108,736
Other assets 5,051 26,527 (26,316) 5,262
Deferred rescission costs 640,663 640,663
------------ ------------ -------------- -----------
$ 876,349 $ 387,949 $ (26,316) $ 1,237,982
============ ============ ============== ===========
Liabilities:
Current liabilities $ 4,976,117 $ 475,758 $ (26,316) $ 5,425,559
Unearned income 196,694 196,694
Long-term obligations 12,594 100,169 112,763
Minority interest 129,545 129,545
------------ ------------ -------------- -----------
5,314,950 575,927 (26,316) 5,864,561
Stockholders' deficit (4,438,601) (187,978) (4,710,633)
------------ ------------ -------------- -----------
$ 876,349 $ 387,949 $ (26,316) $ 1,283,472
------------ ------------ -------------- -----------
Condensed statement of operations:
Revenues $ 196,122 $ 1,617,534 $ (27,510) $ 1,786,146
Operating costs and expenses 848,174 1,469,405 (27,510) $ 2,290,069
------------ ------------ -------------- -----------
Operating income (loss) (652,052) 148,129 (503,923)
Other expenses (187,015) (187,015)
------------ ------------ -------------- -----------
Net income (loss) $ (839,067) $ 148,129 $ (690,938)
============ ============ ============== ===========
Basic net loss per share $ (0.22)
===========
</TABLE>
4
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
The following discussion and analysis should be read in conjunction with
the financial statements of the Company and the accompanying notes appearing
previously under the caption "Financial Statements." The following discussion
and analysis contains forward-looking statements, which involve risks and
uncertainties. The Company's actual results may differ significantly from the
results, expectations and plans discussed in these forward-looking statements.
Results of Operations for the Period Ended September 30, 2000 compared with
Period Ended September 30, 1999:
Management believes that a comparison of the financial performance of the
Company in the nine months ended September 30, 2000 and in the nine months ended
September 30, 1999 clearly shows the continued impact of a lack of capital
necessary to grow the operations. The impact of the capital shortfall continues
to share the attention of Senior Management with the demands of the ongoing
operations.
During the nine months represented, the Company completed it's plans to
down size its operations and reduce overhead in order to accommodate the cash
shortfall. Certain operations and development activities were suspended unless
and until new capital is raised. The resulting impact to Total Revenues was a
decline of 64.1% in 2000 dropping to $196,122 from $546,583 in the previous nine
month period. This Revenue figure decline in the third quarter as compared to
the same period in 1999 was $152,695 which is a decline of only $4,470 from the
previous quarter. It is anticipated that the company is now at a base revenue
level and further revenue declines from a quarter to quarter basis will be
minimal. Marketing activities during the nine months continued to revolve
around limited direct mail to current and past customers and promotions of
specific products. There has been a decline in the provider network as all
regional sales and support activities were suspended other than in the Central
Florida market. Sales and support activity is currently being handled by the
corporate staff in Orlando.
Selling, general and administrative expenses declined 57.7% as compared to
the previous nine months and reflects the efforts taken to reduce operating
expenses. This expense category is higher then the previous quarter due, in
part, to expenses related to the settlement with a former officer and director.
Interest expense increased over the previous nine month period by $82,251 which
is principally related to restatement of interest for loans from a related
party.
Liquidity and Capital Resources
Continued cash flow shortages have slowed the Company's growth and diverted
management's attention away from its aggressive development activities. The
Company has experienced a rise in accounts payable and accrued liabilities
directly attributable to the cash shortfall. Current liabilities increased from
$4,342,254 at the beginning of the year to %4,976,117, or 12.7%. The Company
continues to rely on loans from affiliated and unaffiliated parties to cover
some of its cash flow shortfall. As evidence, Notes Payable increased by
$43,277 during the third quarter to $1,617,128. Loans from Access Healthcare, an
announced acquisition, increased by $109,557 during the quarter.
<PAGE>
Accounts receivable and other current and long-term assets remained
relatively unchanged other then a reduction in Inventory of $6,888 for the
quarter and $29,968 for the nine month period reflecting sales during the
period(s). Total asset decline is explained by the reduction in Inventory and
depreciation of property and equipment. There were no purchases or disposals of
assets during the period(s) other than in the normal course of business.
The cash used in operations for the nine months ended September 31, 2000
and 1999 was $336,795 and $583,029, respectively.
The Company continues to experience negative cash flow and anticipates this
continuing through the end of the current fiscal year. Management believes that
additional funding will be necessary in order for it to continue as a going
concern. As stated in previous filings, management is actively pursuing various
options including the private placement of Preferred and or Common stock, and a
possible secondary public offering of the Companies Common stock
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
As previously disclosed Access HealthMax, Inc. has been named as defendant
in four law suits. These have been brought on behalf of a vendor, two lenders
and an investor in a Limited Liability Company for which Access HealthMax is the
general partner. All suits remain outstanding and the company has engaged
appropriate legal representation.
ITEM 2. CHANGES IN SECURITIES
The following activity took place during the quarter ending September 30,
2000.
The Company issued 100,000 common shares each to Donald Metchick pursuant
to a settlement agreement for all amounts owed and unpaid to this former
Director and Officer, pursuant to Section 4(2) of the Securities and Exchange
Act of 1933.
The Company issued 100,000 common shares each to Donald Metchick, a former
Director and Officer, and Steven Miracle, a current Director and Officer,
related to certain employment agreements. Such shares were earned in January
2000 and were issued pursuant to Section 4(2) of the Securities and Exchange Act
of 1933.
The Company issued a total of 140,000 common shares, to various individuals
relative to direct investments made in the Company, pursuant to Section 4(2) of
the Securities and Exchange Act of 1933.
The Company issued 26,666 share to an individual who had previously made an
investment in the company's "Market License" program. The shares were issued in
return for converting the Market License interest into shares of the Company.
The conversion was made pursuant to Section 4(2) of the Securities and Exchange
Act of 1933.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Access HealthMax, Inc. continues to be in default of is loan agreements and will
be unable to pay interest and principle until new capital has been raised.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
n/a
ITEM 5. OTHER INFORMATION.
The company reached a settlement with a former Officer and Director which
has been previously disclosed.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
On August 31, 2000 the Company filed an 8-K relative to the resignation of
an Officer and Director
SIGNATURES
In accordance with the requirements of the Exchange Act, the Company caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
ACCESS HEALTH ALTERNATIVES, INC.
-----------------------------------
(registrant)
Date: 11/19/00 /s/ Daniel J. Pavlik
-------- ---------------------------------------
(signature)*
Daniel J. Pavlik, President & CEO
Date: 11/19/00 /s/ Steven Miracle
-------- ---------------------------------------
(signature)*
Steven Miracle, Chief Operating Officer
<PAGE>
